I just concluded a conversation with Mike Miller of Bobb Automotive, formerly Bobb Chevrolet in Columbus, Ohio. He told me that they gave up their Chevy franchise because "it just wasn't profitable." He cited the fact that they had 13 competitors in a 45 minute radius and according to Mike, had to "just give them away." With pressure to stock millions of dollars of new inventory, they simply concluded that it just wasn't worth it.
They have a downtown location and they do about 150 used vehicles a month, mostly sub-prime business. Their web site is bobbsaysyes.com. I told Mike that it was very similar to a client of ours in Portland that has a secondary operation called dicksaysyes.com (not a joke).
Mike told me that he knew that, and in fact, copied the dicksaysyes.com website and marketing approach. He also said that in a recent publication, the dicksaysyes.com website ranked #6 and the bobbsaysyes.com website ranked 10th on some survey of most trafficked automotive sites.
Mike also told me something frightening. One of their secondary sources, called Consumer Portfolio Services (CPS), recently took about 30 days to fund a batch of deals that had complete documentation and stipulations. He could only speculate as to the reason for the delay, but surmised that it might have to do with the liquidity problem in the sub-prime marketplace. I'm curious as to whether anyone else is experiencing similar problems, and if so, whether they understand the cause for the delay. Mike also told me that the secondary business is getting much more difficult because sub-prime customers seem to be slipping ever further into debt and unable to come up with even the most nominal down payments.
My discussion with Mike this morning is highly reflective of what I see out there in the market. Specifically, little opportunity to make any money, or even avoid losses in the new car business, and the growing importance of the used car business, particularly the secondary market. On an optimistic note, Mike Miller reinvigorated my confidence. He is a 53 year old, 9-year veteran of the automobile business that refuses to accept the status quo. He's intent on improving the bobbsaysyes.com website and stocking model. He said that he has seen a lot of general managers in his operation come and go, some with good and some with bad ideas. In spite of it all, Mike continues to focus on the fundamentals and made a point of saying that he "tracks and measures everything." I find that managers that track and measure are the ones that typically succeed in tough times.
By the way, Mike has had only one job in the automobile industry, and that's with the Bobb Organization. Prior to joining Bobb, Mike owned a coffee shop. One day, when learning that the coffee shop was for sale, Mr. Bobb asked Mike what he was going to do. Mike said that he looked him in the eye and said, "I'm going to come to work for you."